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FEDERAL RESERVE BANK
OF N EW YORK
r Circular No. 89751
L
December 1 7 , 1980
J
AMENDMENTS TO REGULATION D
Preauthorized Transfers of Funds on Reserve Requirements
To All Depository Institutions,
and Others Concerned, in the Second Federal Reserve District:
Following is the text of a statement issued by the Board of Governors of the Federal
Reserve System regarding reserve requirements on transaction accounts:
The Federal Reserve Board has amended its Regulation D— Reserve Requirements of Depository
Institutions— with respect to the period during which a limited number of telephone or preauthorized
transfers can be made in an account without causing the account to become subject to a reserve
requirement on transaction accounts.
Before revision, Regulation D specified that a depository institution could authorize three or
less telephone or preauthorized transfers of funds to be made within a calendar month from an
account, without subjecting the account to the reserve requirement on transaction accounts.
With the objective of reducing the burden and cost of compliance, the Board has amended
the regulation to provide that the term “calendar month” includes any statement cycle or similar
period of at least four weeks for purposes of the three permissible transfers.
At the same time, the Board made a number of technical changes to Regulation D in the nature
of clarifications and corrections of minor errors.
The amendments became effective December 1, 1980.
Enclosed is a copy of the text of the amendments to Regulation D.
Questions
regarding the amendments may be directed to our Consumer Affairs and Bank Regula
tions Department (T el No. 2 1 2 -7 9 1 -5 9 1 4 ).
A lso enclosed— for those who have complete sets of regulations— is a revised table of
contents. Additional copies of the contents page will be furnished upon request directed
to the Circulars Division of this Bank.
A
n th o n y
M. S o l o m o n ,
President.
Board of Governors of the Federal Reserve System
RESERVE REQUIREM ENTS OF D E PO SITO R Y INSTITUTIONS
AM EN D M EN T TO R EG U LATIO N D
( effective D e c e m b e r
FEDERAL RESERVE SYSTEM
12 CFR Part 204
[Regulation D; docket No. R-0336]
Reserve Requirements o f Depository
Institutions
Board of Governors of the
Federal Reserve System.
ACTION: Final rule and technical
amendments.
SUMMARY: The Board of Governors of
the Federal Reserve System has
amended its Regulation D—Reserve
Requirements of Depository Institutions
(12 CFR Part 204) which imposes Federal
reserve requirements on depository
institutions that maintain transaction
accounts or nonpersonal time deposits.
Under the amendment, a depository
institution may permit a depositor to
effect three or less telephone or
preauthorized transfers from an account
during a statement cycle or similar
period of at least four weeks without
subjecting such account to reserve
requirements on transaction accounts.
At present, the relevant period for
determining the permissible number of
transfers is a calendar month. This
action will reduce the burden of and
cost of compliance with Regulation D.
EFFECTIVE DATE: December 1,1980.
FOR FURTHER INFORMATION CONTACT:
Gilbert T. Schwartz. Assistant General
Counsel (202/452-3625), Paul S. Pilecki,
Attorney (202/452-3281), or Paige
Winebarger, Attorney (202/452-3265),
Legal Division, Board of Governors of
the Federal Reserve System,
Washington, D.C. 20551.
SUPPLEMENTARY INFORMATION: The
Monetary Control Act of 1980 (Title I of
Pub. L 96-221) ("Act") authorizes the
Federal Reserve to impose reserve
requirements solely for the purpose of
conducting monetary policy on all
depository institutions that maintain
transaction accounts or nonpersonal
time deposits. Depository institutions
subject to reserve requirements include
AGENCY:
2)
S u p p le m e n t
3)
A m e n d m e n ts e ffe c tiv e N o v e m b e r
4)
T h is
R e g u la t io n
D , e ffe c tiv e
[Enc. Cir. No. 8975]
13,
N ovem ber
1980.
13,
1980
b e requ ired to c h a n g e a u to m a te d or
o p e ra tio n a l p ro c e d u re s to m o n ito r
a c tiv ity fro m the first d a y o f the m o n th
to the la s t d a y o f a m o n th . B y a llo w in g
a n in stitu tion to a d o p t a s ta te m e n t c y c le
or a n y oth er p e r io d o f at le a s t four
w e e k s , the p u rp o se b e h in d the three
tran sfe r ru le is still s e rv e d . M o r e o v e r ,
the o p e ra tio n a l c o s ts to an in stitu tion
are m in im iz e d , s in c e its b a s ic re c o rd
k e e p in g c y c le c a n b e u s e d a s the
ap p ro p ria te tim e fra m e for lim itin g the
n u m b e r o f te le p h o n e or p re au th orized
tra n sfe rs fro m a n a c c o u n t.
The
B o a rd b e lie v e s
that this
the burden
a m e n d m e n t w ill re d u c e
to
d e p o s ito r y in stitu tion s o f c o m p lia n c e
w ith R e g u la tio n D . C o n s e q u e n tly , the
Board, for g o o d c a u s e fin d s that the
notice and public procedure provisions
o f 5 U.S.C. § 553(b) with regard to this
action are impracticable and contrary to
the public interest. Since the amendment
relieves a regulatory restriction, deferral
o f the effective date pursuant to 5 U.S.C.
§ 553(d) is not necessary. In addition,
several technical amendments to
Regulation D have been made.
Effective December 1,1980, pursuant
to the Board’s authority under section 19
o f the Federal Reserve Act (12 U.S.C.
§ 461 e t seq.), Regulation D (12 CFR Part
204) is amended as follows:
1. In § 204.2(e)(6), the second sentence
is amended to read as set forth below:
§204.2
*
*
Definitions.
*
*
*
(e) “Transaction account’’ * * *
(6)
* * * A n ac co u n t that p erm its or
a u th orizes m o re than three su ch
w ith d ra w a ls in a c a le n d a r m o n th , or
sta te m e n t c y c le (or sim ila r p eriod ) o f at
le a st four w e e k s , is a “ tran sa ctio n
a c c o u n t” w h e th e r or not m o re than three
such w ith d r a w a ls a c tu a lly are m a d e
during su ch p eriod . * * *
*
*
*
*
*
2. In § 204.2(b)(l)(vii), by inserting the
word “ which” after the words
“ withdrawal period has expired and”
and before the words “ have not been
renewed.”
(Corrected Copy).
13, 1 9 8 0 a n d D e c e m b e r 1 1 , 1 9 8 0 .
s li p s h e e t .
PRINTED IN NEW YORK, FROM
1980)
any F e d e ra lly -in s u r e d c o m m e rc ia l or
savings bank, or any su ch b a n k that is
eligible to b e c o m e in su red b y the
Federal Deposit In su ra n ce Corporation;
any mutual or stock savings bank; any
savings and loan association that is a
member of a Federal Home Loan Bank,
insured by, or eligible to apply for
insurance with, the Federal Savings and
Loan Insurance Corporation; and any
credit union that is insured by, or
eligible to apply for insurance with, the
National Credit Union Administration
Board. The reserve requirements of the
Act also apply to United States
branches of foreign banks, to United
States agencies of foreign banks with
total worldwide consolidated bank
assets in excess of $1 billion, and to
Edge and Agreement Corporations.
The revised Regulation D which
became effective on November 13,1980,
implements the provisions of the Act.
Under Regulation D, the definition of
“transaction account” includes accounts
under the terms of which, or which by
practice of the depository institution, the
depositor is permitted or authorized to
make more than three withdrawals per
calendar month for purposes of
transferring funds to another account or
for making a payment to a third party by
means of preauthorized or telephone
agreement, order or instruction. The
Board adopted the three-transfer per
calendar month rule so that institutions
could continue to offer services to
enable depositors to effect occasional
transfers, particularly in situations such
as when a depositor is unable to get to
the depository institution to conduct
business or where there are inadvertent
overdrafts in a checking account which
a customer wishes to cover with funds
from another account. Recent comments
from depository institutions indicate
that account records at many
institutions are maintained on the basis
of statement cycles which, although they
approximate a one-month period, do not
necessarily coincide with a calendar
month. However, in order to comply
with the regulation, institutions would
F o r t h is R e g u l a t i o n t o b e c o m p l e t e , r e t a i n :
1 ) R e g u la t io n D , as r e v is e d e ffe c t iv e N o v e m b e r
to
1,
FED AL R G
ER
E ISTE ,
R
VOL. 45, NO. 240
(over)
§ 204.3
Computation and maintenance.
3. In § 204.3(a), the third sentence is
revised by deleting “$5 million” and
inserting in its place ‘‘$15 million” .
4. In § 204.3(a), subparagraphs (l)(ii)
and (2)(ii) are revised to read as follows:
(a) M a in ten a n c e o f r eq u ired reserves.
* * *
a v o id u n d er-u tiliza tio n o f the lo w
re se rv e tran ch e, the a llo c a tio n m a y be
c h a n g e d at the b e gin n in g o f a c a le n d a r
m o n th . U n d e r oth er c ir c u m sta n c e s, the
lo w re se rv e tran ch e m a y b e r e a llo c a te d
at the b e gin n in g o f a c a le n d a r year.
(2) E d ge a n d A g reem en t C orporations.
(i)
(1) U n ited S ta te s b ra n ch es an d
a g e n cie s o f foreig n banks.
(i) V
*
(ii) * * * if the low reserve tranche
cannot be fully utilized by a single office
or by a group o f offices filing a single
report o f deposits, the unused portion of
the tranche may be assigned to other
offices o f the same foreign bank until the
amount o f the tranche is exhausted. The
foreign bank shall determine this
assignment subject to the restriction that
if a portion o f the tranche is assigned to
an office in a particular State, any
unused portion must first be assigned to
other offices located within the same
State and within the same Federal
Reserve District, that is, to other offices
included on the same aggregated report
o f deposits. If necessary in order to
*
*
*
(ii) * * * If the low reserve tranche
cannot be fully utilized by a single office
or by a group o f offices filing a single
report of deposits, the unused portion of
the tranche may be assigned to other
offices o f the same institution until the
amount o f the tranche is exhausted. An
Edge or Agreement Corporation shall
determine this assignment subject to the
restriction that if a portion o f the
tranche is assigned to an office in a
particular State, any unused portion
must First be assigned to other offices
located within the same State and
within the same Federal Reserve
District, that is, to other offices included
on the same aggregated report of
deposits. If necessary in order to avoid
under-utilization o f the low reserve
tranche, the allocation may be changed
at the beginning o f a calendar month.
Under other circumstances, the low
reserve tranche may be reallocated at
the begining o f a calendar year.
*
*
*
*
*
§ 204.4
[Amended]
5. In § 204.4(b) (l)fii) and (2)(ii), by
deleting the word “ exceeds” and
inserting in its place “ exceed” .
6. In § 204.4(b)(2), by deleting the
parentheses that appear around the
phrase “ than its required reserves
computed using the reserve ratios in
effect on August 31,1980."
7. In | 204.4(g)(2)(iv), by deleting the
phrase “ daily average vault cash" and
inserting “ daily average total required
reserves” in both places that it appears.
8. In § 204.6(b)(1), by deleting the
word "on ” which appears after the word
“ im posed” and before the word "for."
By order o f the Board of G o v e r n o r s ,
December 5,1980.
Theodore E. Allison,
Secretary of the Board.
[FR D oc. 80-38434 Filed 12-10-80: 8:45 am]
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